Why Do You Need a Living Trust?

So you can stay in control of the most important things in life.  A living trust allows you to protect your family because you control who gets your assets as well as the way they are distributed.  A living trust is the only way to pass on your assets with critical protections in place while allowing this information to be kept out of the state court system. The reason why you want to avoid going through probate is because it’s expensive, slow and all on public record. It is slow because it takes anywhere from 1-2 years or more to complete the process and in addition all of this information about your assets and who is receiving them is part of the state court system and thus free to the public.

Please Note: If you do not have a trust or will then the state determines who inherits your assets.

On top of all this probate can cost up to 5% of the fair market value of your estate.  It is even more important for those with minimal equity in their homes to avoid probate than those whose real property has no remaining mortgage. You will see from the following example that if you own a home, not having a living trust can cost your family tens of thousands of dollars when you pass on:

John Smith dies on January 1, 2011 without a trust and the following assets:

(1) Home in Carlsbad, fair market value: $500,000.  Mortgage balance owed: $450,000.

(2) 401k plan:  $200,000.

(3) Stocks/bonds:  $50,000.

(4) Checking & Savings Accounts:  $50,000.

Total Net Value: $350,000

Total FMV value: $800,000

Probate Attorneys Fees*$19,000!!! (Calculated from $800,000. See Probate Code § 10810)

*Does not include costs for appraisals of all property, court costs, filing fees, etc.

Don’t put this burden on your family. The only way to avoid probate is with a fully funded living trust. When you set up a living trust, you transfer assets from your name to the name of your trust, which you control yourself or jointly if married — such as from “John and Jane Smith, husband and wife” to “John and Jane Smith, trustees of The Smith Living Trust dated February 1, 2011.” 
 With a diligent financial advisor the funding of your living trust will be much simpler because we can determine what assets you own and how they will need to be re-titled for your living trust.

If you have any questions please do not hesitate to contact us at (858) 461-8987.


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Problems With Do-It-Yourself Estate Planning

So you know need a will or a trust but you figure you have a modest estate that should be relatively simple to plan for and want to save a few bucks to do-it-yourself. Maybe you go to legalzoom® or another do-it-yourself estate planning website and you naturally think you’ll be saving some time and money. The problem is do-it-yourself online estate plans do NOT prevent you from needing an attorney, the do-it-yourself generated documents merely make it more difficult and expensive in the end for everybody else.

Do you know what asset protection options are available for your children’s inheritance if you created a trust online? Would you even know to ask this question if you’re doing it all by yourself? Now that you’ve created your trust did you know that you still have change title to almost all of your assets? What do you do when a loved one passes away and you’ve created a joint living trust? Do you need to divide the living trust into A and B trusts now? Did you know that you’ll have re-title some of your assets? Questions like these are critical and online sites such as legalzoom® do not have an attorney available to talk to nor or they permitted to provide legal counseling. In fact if you take a look at their disclaimer it states: “LegalZoom is not a law firm, and the employees of LegalZoom are not acting as your attorney. LegalZoom’s legal document service is not a substitute for the advice of an attorney. LegalZoom is not permitted to engage in the practice of law. LegalZoom is prohibited from providing any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms or strategies.” When you’re planning your entire estate out you need the guidance of professional legal advice. Inevitably you will have questions about something and you need an attorney to turn to when you have these questions. At The Kleinkopf Law Firm we do not charge hourly and we encourage all questions you have. The way to begin planning your estate is to become as educated as possible about estate planning so you can make the best decision for you and your family.

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